Recurrent RAI financial crisis explained.

Think twice about taking an IOU from RAI. The Italian State's former broadcasting monopoly is in deep financial trouble. Semi-sacred Christmas bonuses were chopped for all 13,000 employees, there is a total ban on overtime. Some 700 jobs were lost in 1993 and at least another 500 will go this year.

Last December an RAI spokesman claimed that, without government intervention, the state broadcaster would not have the money to meet last month's and this month's payrolls. Debt, he said, was at a record 1,500 billion Lire -- around $900 million. RAI losses for '93 alone were estimated to have hit 560 billion Life.

RAI President Claudio Dematte explained to employees why they were not going to see their Christmas extra -- equal to one month's pay: "The cash box is empty and the banks have closed the door on us."

He went on to point out that things will be getting worse, not better. If the government did not step in, he said, projected RAI losses in 1994 would jump a terrifying 34 per Sent, to 755 billion Life,

The broadcaster was lobbying for its own Christmas bonus from the State in the form of a government salvage package and had an interest in black pessimism. Still, Dematte was not bluffing. RAI finances are a mess.

To make matters worse, the Italian Government, looking at some empty bank accounts of its own, was in the end far less generous than RAI had hoped and, probably, expected.

The government came out with a decree on the 29th of December which should theoretically have the effect of limiting PAI losses in 1994 to only a little more than 130 billion Lire.

Unfortunately, only some of this is in real money. The larger part instead consists either in projected savings of one kind or another or in bookkeeping wizardry.

Most of the fresh money that does come in will be from a five per cent increase in the TV set license fee (RAI had asked for 15 per cent) and an increase in the proportion of the fee the broadcaster is permitted to keep once it's collected. These two moves put about 130 billion Life of cash into RAI coffers.

The license fee that RAI pays to the State has also been reduced, and to pay part of its debt to the Italian Treasury has forced RAI's company, state-owned IRI, to shift some of its RAI shares to the Treasury. That means that interest will no longer be paying on the balance due, creating a savings on financial costs.

Most of the rest is legerdemain. Certain RAI material assets will be appreciated, in its balance sheets, an operation which makes the numbers look better but does not actually put bread in anyone's mouth.

The salvage plan further assumes that State officials will somehow become so much better at collecting the TV set fees that presently evading viewers will rush to bring to RAI another 100 billion annually of the approximately 450 billion Lire the Government thinks the public at large "forgets" to pay.

Above all, it has been decreed that RAI will discover ways of reducing cost by 420 billion Life without "appreciably" reducing its service to the public. A detailed plan as to how this is to be accomplished is expected for March.

This is a compromise -- a compromise between RAI's desire to keep drawing the same audience (and provide the same domestic and international services) and the Government's recognition that the coffers are just plain empty.

Like many compromises, it satisfies no one. On the day it was announced RAI Personnel Director Enrico Celli told the broadcaster's labor unions that, "this decree does not solve RAI's problems, if anything, it makes them worse." He feels the salvage plan is insufficient.

Others thought it far too liberal. Silvio Berlusconi's Fininvest, RAI's principal competitor, has threatened to take its objects to the European Anti-trust authorities in Brussels, convinced that "unnecessary" State aid to RAI unfairly "distorts competition in the information and advertising markets."

The Italians have an expression about the "knots reaching the comb" which is an equivalent to the North American expression, the excrement hitting the fan. A lot of knots are suddenly coming home to roost in Italy. RAI is only one of these.

The real lesson, one it will be very painful to learn, is that a golden age is over. The natural and economic laws that have until now enjoyed special suspension in RAI have come crashing to earth like bricks through a greenhouse roof.

They may fly again - where there is a political will there is a bookkeeping way, especially in Italy - but for the moment, ragazzi non c'e una Lira, "kids, we ain't got a dime" in Italian vaudeville parlance.

  REALITY CHECK
     RAI's Woes

  * Overstaffed organization

  * Internal bureaucracy

  * Financial losses

  * Corruption charges

  * Political pressure

  * Viewership losses

  * Insufficient revenues